The Chart:

The Pitch:

Phivida markets cold drinks infused with nano-hemp oil extracts as well as a line of cannabidiol (CBD) supplements. The company has been securing licensing agreement to sell in several U.S. states, which they plan on using as a springboard towards global expansion. The have also signed a supply agreement with Namaste as the preferred global online retailer and digital affiliate marketing partner for Phivida’s product. The products are positioned for their additive health benefits and their extracts are manufactured using a supercritical CO2 fluid extraction process. They recently announced a JV with WeedMD (Canada LP) to manufacture, market and distribute CBD-infused beverages for the medical and future adult-use cannabis markets across Canada.

The Details

Investors have been mostly focused on the THC and psychoactive effects of cannabis but there is huge potential for the CBD (non-psychoactive) infused-products. Hemp is different from marijuana as it has higher concentration of CBD and lower concentration of THC (the active psychoactive ingredient in cannabis). CBD is a natural pain reliever, and has anti-inflammatory properties along with a host of other nutritional benefits. As such, CBD hemp oil products have been gaining acceptance from organizations such as the World Health Organization and the World Anti-Doping Association.

The CBD market is huge both domestically and internationally and Phivida is targeting the healthy lifestyle niche. Phivida is growing its business along the west coast of the USA and are working on agreements for international markets such as Japan. They recently signed a JV with WeedMD to capture market share of the beverage industry in Canada once CBD infused products become federally legal.

In Canada, the Bill C-45 (legalization of Cannabis) added an amendment to allow the category of ‘cannabinoid-infused foods and beverages’, the exact legalization date is still up for debate as only rough guidelines of no more than 12 months after the proposed cannabis act enactment date. This delay gives Phivida ample time to develop their products, marketing, ramp up production, and learn from their experiences in the legal US markets in which they operate. Phivida already has a mass scale operation in California and is rolling out into the retail market their Nano-CBD™ infused functional foods, beverages and natural health products.

Phivida is well positioned to grab market share of this new consumer group as their natural health offerings for food and beverages are infused with premium CBD hemp extracts and they are building out a brand with sports and entertainment personalities. They recently signed a LOI with Athletes for Care, to form a partnership in CBD education and research with professional and amateur-level athletics. This partnership will give exclusivity to Phivida as the sole health-based CBD-infused beverage brand partner of Athletes for Care. To help further build the brand they have brought on board some heavy hitters in the beverage industry with a wealth of experience.

The Team:

John-David Belfontaine – Chairman and Founder – a strong capital markets background with more than a decade of corporate finance and investor relations. Over the last several years, he’s focused on the cannabis sector and made strong inroads into the US market. He recently stepped aside as CEO and replaced himself with former Red Bull Canada president.

James Bailey – New CEO – Formerly Red Bull Canada president and responsible for growing the brand in Canada since 2010. A strong marketing background in both the apparel and food sectors, having come up as a brand exec for Adidas Canada, Blue Goose Pure Foods and Merrell Footwear and Apparel. Bailey also worked agency side as a managing director for Sid Lee, overseeing its U.S. operations.

Graham Magee – VP Operations and Sales – Involved in the CBD and hemp business for a number of years and has a solid rolodex of contacts throughout the US.

Kyle Johnston – Vice President of Business Development – 10 years of experience operating financial media companies with expertise in digital marketing. Extremely well known in the Canadian public venture capital sector.

The Catalysts:

Future news flow about the athlete and celebrity endorsements should help the brand further increase their market share across the globe. They are also exploring some partnership agreements both in and out of the CBD space. Another catalyst is that the JV with WeedMD has the potential for a SpinCo which will be beneficial to shareholders.

The Grade:

Phivida has build the team to grow their brand worldwide and with the growing global acceptance of CBD for its health and medicinal benefits, there is huge upside potential for this company. They making the right partnerships along the way and they seem destined to be a leader in the infused beverage market. Exposure to this is likely a must to round out any cannabis investment portfolio.